Exercise of Module 4

Assignment 2: Prepare a Sales Budget
James Inc. sells industrial solvents in 5-gallon drums. James expects the following units
to be sold in the first 3 months of the coming year:
January 41,000
February 38,000
March 50,000
The average price for a drum is P1,750.
Required:
Using Excel, prepare a sales budget for the first 3 months of the coming year, showing
units and sales revenue by month and its total for the quarter.
Assignment 3: Prepare a Production Budget

James Inc. sells industrial solvents in 5-gallon drums. James expects the following units
to be sold in the first 3 months of the coming year:
January 41,000
February 38,000
March 50,000
April 51,000
James' policy is to have 25% of next month's sales in ending inventory. On January 1, it
is expected that there will be 6,700 drums of solvent on hand.
Required:
Using Excel, prepare a production budget for the first quarter of the year. Show the
number of drums that should be produced each month as well as for the quarter in total.
Assignment 4: Prepare a Direct Materials

Purchases Budget
James Inc. makes industrial solvents sold in 5-gallon drums. Planned production in units
for the first 3 months of the coming year is:
January 43,800
February 41,000
March 50,250
Each drum requires 5.5 gallons of chemicals and one plastic drum. Company policy
requires that ending inventories of raw materials for each month be 15% of the next
month's production needs. That policy was met for the ending inventory of December in
the prior year. The cost of one gallon of chemicals is P100. The cost of one drum is
P80. (Note: Round all unit amounts to the nearest units. Round all the peso amounts to
the nearest peso.)
Required:
1. Prepare a direct materials purchases budget for chemicals for the month of January
and February.
2. Prepare a direct materials purchases budget for drums for the month of January and
February.
Assignment 5: Prepare Direct Labor Budget

James Inc. makes industrial solvent. Planned production in units for the first 3
months of the coming year is:
January 43,800
February 41,000
March 50,250
Each drum of industrial solvent takes 0.3 direct labor hour. The average wage is P80 per
hour.
Required:
Using Excel, prepare a direct labor budget for the month of January, February, and
March, as well as the total for the first quarter.

Assignment 6: Prepare an Overhead Budget

James Inc. makes industrial solvent. Budgeted direct labor hours for the first 3 months
of the coming year are:
January 13,140
February 12,300
March 15,075
The variable overhead rate is P35 per direct labor hour. Fixed overhead is budgeted at
P137,500 per month.
Required:
Using Excel, prepare an overhead budget for the months January, February, and March,
as well as the total for the first quarter. (Note: Round all peso amounts to the nearest
peso)
Assignment 7: Prepare a Cost of Goods Sold

Budget
Claude Company manufactures a line of office chairs. Each chair takes P700 of direct
materials and uses 1.9 direct labor hours at P800 per direct labor hour. The variable
overhead rate is P60 per direct labor hour, and the fixed overhead rate is P80 per direct
labor hour. Claude expects to produce 20,000 chairs next year and expects to have 675
chairs in ending inventory. There is no beginning inventory of office chairs.
Required:
Prepare a cost of goods sold budget for Claude Company.
Assignment 8: Prepare a Selling and

Administrative Expense Budget
Gazel Company makes and sells paper products. In the coming year, Gazel expects total
sales of P19,730,000. There is a 3% commissions on sales. In addition, fixed expenses
of the sales and administrative offices include the following:
Salaries P960,000
Utilities 365,000
Office space 230,000
Advertising 1,200,000
Required:
Using Excel, prepare a selling and administrative expense budget for Gazel Company for
the coming year.

Assignment 9: Prepare a Budgeted Income

Statement
Oliver Company provided the following information for the coming year:
Units produced and sold 160,000
Cost of goods sold per unit P315
Selling price
P540
Variable selling and admin expense/unit P 55
Fixed selling and admin expenses P423,000
Tax rate
35%
Required:
Using Excel, prepare a budgeted income statement for Oliver Company for the coming
year. (Note: Round all income statement amounts to the nearest peso.)
Assignment 1: Prepare a Schedule of Cash

Collections on Accounts
Kuala and Company is a legal service firm. All sales of legal services are billed to the
client (there are no cash sales). Kuala expects that on average, 20% will be paid in the
month of billing, 50% will be paid in the month following billing, and 25% will be paid in
the second month following billing. For the next 5 months, the following sales billings
are expected:
May P 84,000
June 100,800
July 77,000
August 86,800
September 91,000
Required:
Using Excel, prepare a schedule showing the cash expected in payments of accounts
receivable in August and September.

Assignment 2: Prepare a Schedule of Cash

Disbursements on Accounts Payable
Wight Inc. purchases raw materials on account for use in production. The direct
materials purchases budget shows the following expected purchases on account:
April P 374,400
May 411,200
June 416,000
Wight typically pays 20% on account in the month of billing and 80% the next month.
Required:
1. How much cash is required for payments on account in May?
2. How much cash is expected for payments on account in June?

Assignment 3: Prepare a Cash Budget

Julliene's Pizzeria provided the following information for the month of October:
a. Sales are budgeted to P157,000. About 85% of sales is cash; the remainder is on
account.
b. Julliene's expects that, on average, 70% of credit sales will be paid in the month of
sales, and 28% will be paid in the following month.
c. Food and supplies purchases, all on account, are expected to be P116,000. Julliene's
pays 25% in the month of purchase and 75% in the month following the purchase.
d. Most of the work is done by the owners, who typically withdraw P6,000 a month
from the business as their salary. (Note: The P6,000 is a payment in total to the two
owners, not per person) Various part-time workers cost P7,300 per month. They are
paid for their work weekly, so on average 90% of their wages is paid in the month
incurred and the remaining 10% in the next month.
e. Utilities average P5,950 per month. Rent on the building is P4,100 per month.
f. Insurance is paid quarterly; the next payment of P1,200 is due in October.
g. September sales were P181,500 and purchase of food and supplies in September
equaled P130,000.
h. The cash balance on October is P2,147.
Required:
Using Excel, prepare a cash budget for the month of October.

Exercise of Module 4

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Assignment 2: Prepare a Sales Budget

Assignment 3: Prepare a Production Budget

Assignment 4: Prepare a Direct Materials

Assignment 5: Prepare Direct Labor Budget

Assignment 6: Prepare an Overhead Budget

Assignment 7: Prepare a Cost of Goods Sold

Assignment 8: Prepare a Selling and

Assignment 9: Prepare a Budgeted Income

Assignment 1: Prepare a Schedule of Cash

Assignment 2: Prepare a Schedule of Cash

Assignment 3: Prepare a Cash Budget

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